Student Loan Forgiveness 2025: The Winners, Losers, and $0 Balance Miracles

Debt Erasure Hits Record High—While Millions Still Wait.

The Great Sorting

The final numbers are in, and they paint a fractured picture. A wave of student loan forgiveness crashed ashore in 2025, wiping slates clean for a targeted segment of borrowers. Public servants under expanded PSLF waivers saw the most dramatic relief. Income-Driven Repayment (IDR) account adjustments delivered surprise $0 balances to others who'd paid for decades.

Left on the Dock

But the tide didn't lift all boats. Borrowers with commercially-held FFELP loans, those outside specific forgiveness programs, and applicants caught in servicer processing backlogs found themselves stranded. The much-debated broad-based cancellation plan remained a political phantom, leaving wide swaths of debt untouched.

The Finance of Forgiveness

The mechanism itself was a bureaucratic beast—a triumph of ledger entries over tangible cash flow, the kind of accounting magic that would make a Wall Street quant smirk while calculating their next bonus. Relief wasn't distributed; it was adjudicated, line by line, rule by rule.

The legacy of 2025 isn't a clean end to the student debt crisis. It's a stark ledger: a historic number of discharges for some, a reinforced status quo for many. The system proved it could forgive—but also who it would consistently forget.

Key Takeaways

• Borrowers under Income-Driven Repayment plans that have made enough payments to qualify for a loan discharge will soon receive tax-free forgiveness after months of pauses.
• Although delayed, the Department of Education is working to process forgiveness for borrowers in the Public Service Loan Forgiveness and Borrower Defense programs.

Many federal student loan borrowers have faced difficulties accessing forgiveness this year due to ongoing court cases and changes to the student loan system. However, as the new year begins, the Department of Education has resumed several forgiveness programs that were delayed in 2025.

Firstly, before former President Joe Biden left office in January 2025, his administration approved billions of dollars in forgiveness to borrowers through various forgiveness programs, including income-based repayment plans, Public Service Loan Forgiveness, total and permanent disabilities, or borrower defense, where a borrower's school engaged in certain types of misconduct.

One main route to forgiveness that was blocked in part of 2025 was income-driven repayment plans, where borrowers can get the remainder of their loans forgiven after they have made 20 or 25 years of payments. In addition, many public service workers and some nonprofit workers are waiting to complete their 10 years of payments and receive forgiveness through the PSLF program.

Why This Matters

Student loan borrowers have faced many changes to their student loan repayment plans and loan forgiveness since the COVID-19 pandemic, some of which have delayed their access to a loan discharge. Knowing the status of different forgiveness programs can help borrowers understand when they can expect their forgiveness.

Forgiveness Under Income-Driven Repayment Plans

This year, the Department of Education paused processing forgiveness for borrowers under income-driven repayment plans who had made enough payments to qualify—but the borrowers who have been waiting will soon have their loans discharged.

Income-driven repayment plans and the forgiveness promised after a certain number of payments have gone through many fluctuations this year. In mid-2025, the Department of Education paused loan forgiveness, citing a court ruling against the Saving for a Valuable Education plan, which is soon to be eliminated.

However, in October, the Department of Education announced that it WOULD resume granting forgiveness under the Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn plans. In addition, the Department said any borrower who becomes eligible for student loan forgiveness before 2025 ends will not be taxed federally on their forgiveness, even if their forgiveness is processed in 2026.

Between Nov. 1 and Nov. 30, the Department of Education approved 170 loan discharges through the Income-Based Repayment Plan. However, Scott Buchanan, executive director of the Student Loan Servicing Alliance, said that between October and early December, loan servicers have approved thousands of IDR forgiveness applications.

Servicers will continue to approve 2025 applications for forgiveness until next year, likely clearing out the backlog by March or April, Buchanan said.

Related Education

Public Service Loan Forgiveness

In 2025, the Department of Education has been working to grant forgiveness to borrowers through the PSLF "buy-back" opportunity. The buy-back option allows public service workers with student loans who have reached 10 years of repayment to "buy back" the months they skipped while in deferment or forbearance.

Applications for PSLF buyback have spiked since millions of SAVE borrowers were placed in administrative forbearance, and the Department of Education has been processing applications to either approve or deny forgiveness through the buyback. Between November 1 and November 30, the department granted 280 loan discharges through PSLF; however, 80,210 PSLF buy-back applications remained pending.

This year, as well, the TRUMP Administration created a rule that will restrict access to PSLF for workers if the Department of Education concludes that the organization they work for engages in "illegal" activities. This rule will take effect in July 2026.